THE FOLLOWING LEGAL STUDY ARTICLE  POSTING IS INTENDED TO SUPPORT  AWARENESS AND UNDERSTANDING. IT IS ONLY A  PRELIMINARY LEVEL LEGAL STUDY ARTICLE AND IT IS NOT LEGAL ADVICE.   IF THE READER SEEKS LEGAL ADVICE CONCERNING HIS OR HER PARTICULAR SITUATION, HE OR SHE SHOULD SEEK OUT AN ATTORNEY IN A LAWYER CLIENT RELATIONSHIP.

Qualified First Time Homebuyer Early IRA Distributions Can Happen Multiple Times During An Individual’s Lifetime And Can Include Acquiring, Constructing Or Reconstructing A Residence.

Although there is a 10 percent additional income tax on early distributions from qualified retirement plans under 26 USC § 72 (t)(1) , that statutory subsection does not apply to distributions to an individual from individual retirement accounts under 26 USC § 408 (a) or individual retirement annuities under under 26 USC  § 408 (b) if they are qualified first time homebuyer distributions under 26 USC § 72 (t)(2) (F)(8 ).  See 26 USC § 72 (t)(1); 26 USC § 72 (t)(2) (F); and 26 USC 7701 (a)(37).

A first time homebuyer means any individual if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 2 year period ending on the date of acquisition of the principal residence , and the individual is not subject to certain rules applicable under 26 U.S.C. §1034 (h) or (k) to members of armed forces or rules applicable to individuals whose tax home is outside of the U.S. See 26 USC § 72 (t)(2) (F) (8)(D)(i) (I)(II)   .

A qualified first time homebuyer distribution means any payment or distribution received by an individual to the extent such payment or distribution is used by the individual before the close of the 120th day after the day on which such payment or distribution is received to pay qualified acquisition costs with respect to a principal residence of a first-time homebuyer who is such individual, the spouse of such individual, or any child, grandchild, or ancestor of such individual or the individual’s spouse . See 26 USC § 72 (t)(2) (F) (8)(A)

Qualified acquisition costs means the costs of acquiring, constructing, or reconstructing a residence. Such term includes any usual or reasonable settlement, financing, or other closing costs. See 26 USC § 72 (t)(2) (F) (8)(C)

The date of acquisition is the date on which a binding contract to acquire the principal residence is entered into, or on which construction or reconstruction of such a principal residence is commenced . See 26 USC § 72 (t)(2) (F) (8)(D)(iii)(I)(II)

The aggregate amount of payments or distributions received by an individual which may be treated as qualified first time home buyer distributions for any taxable year shall not exceed the excess (if any) of $10,000, over the aggregate amounts treated as qualified first time homebuyer distributions with respect to such individual for all prior taxable years .  See 26 USC § 72 (t)(2) (F) (8)(B)(i)(ii).

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